New Report Shows HMO Executives Receive Huge Compensation

HMO Executive With Highest Compensation Received Over $54 Million in 2000 and Had Unexercised Stock Options of $358 Million

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Washington, DC - A new report issued by a consumer health organization shows that top HMO executives are receiving huge compensation packages. The report, issued by Families USA, documents that the top HMO executive received more than $54 million in compensation in 2000 and had $358 million in unexercised stock options.

The report comes at a time when the managed care industry is fighting patient protection legislation with claims that the costs of such protections are too expensive. The report was released to coincide with the beginning of Senate debate on a patients' rights bill introduced by Senators John McCain, John Edwards, and Edward Kennedy.

The highest paid executive in the industry in 2000 was William W. McGuire, CEO of UnitedHealth Group Corporation. According to the Families USA report, top-level executives of major managed care companies - including Aetna, CIGNA, Oxford Health, and WellPoint Health Networks - received multi-million dollar compensation packages and held unexercised stock options in the dozens of millions of dollars.

"While the managed care industry decries the pennies needed for important patient protections, it is glad-handing many millions of dollars into the pockets of its top executives," said Ron Pollack, Families USA's executive director. "Clearly, the industry has a double standard about costs - a very generous standard for its executives and a miserly one for America's consumers and patients."

The report shows that the top-five managed care executives received the following compensation in 2000, exclusive of unexercised stock options:

• William McGuire (CEO of UnitedHealth Group): $54.1 million
  
• Wilson Taylor (Retired Chairman, CIGNA): $24.7 million
  
• Ronald Williams (Executive Vice President, WellPoint): $13.2 million
  
• William Donaldson (Chairman, Aetna): $12.7 million
  
• Leonard Schaeffer (Chairman and CEO, WellPoint): $11.1 million

According to the Families USA report, the five executives with the highest amount of unexercised stock options at the end of 2000 were:

• William McGuire (CEO, UnitedHealth Group): $357.9 million
  
• Stephen Hemsley (President and COO, UnitedHealth Group): $144.9 million
  
• Norman Payson (Chairman and CEO, Oxford Health Plans): $115.4 million
  
• Wilson Taylor (Retired Chairman, CIGNA): $66.1 million
  
• Leonard Schaeffer (Chairman and CEO, WellPoint): $64.6 million

"The managed care industry is increasing premiums at 10, 12, 15 and even higher percentages per year and is lavishing large compensation packages on its top executives," said Pollack. "If the industry believes that the sky would fall if low-cost patient protections were established to protect America's families, they should be no less concerned about double-digit premium increases and huge compensation packages to their top executives."

The Families USA report examines compensation in the year 2000 for the highest-paid executives of the 10 for-profit, publicly traded companies that own health plans serving multiple states. These include: Aetna Inc.; CIGNA Corporation; Coventry Health Care, Inc.; Health Net, Inc.; Humana Inc.; Oxford Health Plans, Inc.; PacifiCare Health Systems, Inc.; Sierra Health Services, Inc.; UnitedHealth Group Corporation; and WellPoint Health Networks Inc. Not included in the study are two companies (Maxicare Health Plans, Inc. and United American Healthcare Corporation) that had not filed a fiscal year statement with the Securities and Exchange Commission (SEC) at the time the report was prepared.

The compensation-related data for the report is based exclusively on the information provided by those companies to the SEC.

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org